I always suggest people count the cost of how much they stand to lose if they can't make the trip. Consider non-refundable airfares, car rental, reservations for lodgings, etc. If that adds up to more money than you can afford to lose, travel insurance makes sense. Some insurance includes other things like health insurance while away, returning you home if you are injured or become very ill, and -- something no one wants to imagine -- return of remains if death occurs while abroad. I am sure there are other things covered too.
As with all insurance policies you have to compare, read the fine print and decide which one is best for your needs. It is like having insurance on your house. You hope you never need it but if you do, you sure are glad you bought it.
Be sure to shop around when looking for trip insurance. Sometimes places like AAA has a better price (even for nonmembers) than the rates offered by some tour companies...and make sure you're comparing apples to apples when shopping around...only the fine print can tell you those details.
sta travel offers trip insurance for inexpensive rates -- the y charge by the lenght of the trip rather than by how much you spend for your trip -- and insure it for $20,000 plus medical etc -- you may want to look at that.